Felix Salmon

When banks have no reputation left to lose

April 21, 2009

The government wants Chrysler’s bank lenders to take a steep 85% haircut on their debt. The banks have now come back with an aggressive counteroffer, saying they will accept no more than a 35% haircut, and even then they want Fiat to put new money into Chrysler and they want a 40% equity stake for themselves to boot.

TARP datapoint of the day

April 21, 2009

The SIGTARP’s quarterly report to Congress (that’s Neil Barofsky, for those keeping track at home) runs to 250 densely-written pages. The news coverage is concentrating, rightly, on the fact that Barofsky is already investigating no fewer than 20 fraud cases associated with TARP funds, and also the rather alarming fact that PPIP fund managers might actually be forced to accept compensation caps after all. (If that does happen, you can be sure that Pimco, BlackRock, and the rest will immediately pull out of the scheme, leaving it doomed to failure.)

How to avoid a housing bubble, state regulation edition

April 21, 2009

Which nanny state:

    Banned its mortgage lenders from imposing prepayment penalties; Banned balloon repayments; Banned negative amortization mortgages; Banned loans based only on collateral value without regard to the borrower’s ability to repay the loan; Banned lenders from charging for services the borrower didn’t receive;

–and thereby avoided the worst effects of the housing bubble?

Can Geithner stop banks withdrawing from TARP?

April 21, 2009

Tim Geithner is sensibly laying out pretty strict criteria for when he will allow banks such as Goldman Sachs and JP Morgan to repay their TARP money. It’s not enough that the banks themselves be healthy, he tells the WSJ: he will also consider “the overall health of the financial system and the flow of credit”.

Monday links look at banks’ books

April 20, 2009

Citi’s Earnings: Even Cittier Than You Think: Dear John Thain gets into the weeds, and doesn’t like what he sees.

Do CDSs cause more bankruptcies?

April 20, 2009

Charles Davi has spent 1500 words replying in great detail to my blog entry about whether the CDS market has a deleterious effect on bankruptcy negotiations. He’s basically correct, as far as he goes, and indeed I did mix up an Event of Default with a Credit Event — my bad. But still I think he misses the bigger picture.

Pulitzer datapoint of the day

April 20, 2009

Number of 2009 Pulitzers awarded for financial journalism: 0. poll by twiigs.com

The no-news market move

April 20, 2009

It’s a bad day in the stock market, with the Dow down more than 3%. But “early March levels”? No. In early March, the Dow was a good thousand points lower than it is now, and the XLF index of financial stocks, which is trading at just over $10 today, was somewhere below $7. So let’s keep things in perspective, here: we’ve had a big run-up in stocks over the past few weeks, and it’s only natural that they will pull back occasionally.

Vulture fund datapoint of the day

April 20, 2009

Liberia, with the aid of the World Bank, has been negotiating with vulture funds holding $1.2 billion of its debt. You know what vulture funds are, right? They’re evil hedge-fund types who buy up debt at pennies on the dollar, and then sue for repayment in full, with interest and penalties and everything.